Cash from U.S. builds houses in Mexico

Cross-border company helps immigrants buy construction supplies

October 24, 2004|By Patrick Rucker | Patrick Rucker,CHICAGO TRIBUNE

Inocencio Cruz used to imagine that building a home in Mexico would be a family affair. He would send money to his parents from Chicago and rely on them to buy the supplies and oversee the work.

But with the help of Construmex, a cross-border contractor, immigrants such as Cruz, 22, are able to buy the construction materials they need to build homes in Mexico.

"I do everything from here," he said recently. "All my parents have to do is talk on the phone and all the materials arrive."

Although the Mexican economy long has benefited from remittances sent from north of the border, that wealth often has to be used for expenses such as food, medicine and school tuition.

Lately, the Mexican government has tried to channel more of the infusion from the United States - which totaled $13.3 billion last year - toward the new-home market in an effort to avert a housing crisis.

Mexico has a deficit of 4.3 million dwellings, about 20 percent of its housing stock, according to the Inter-American Development Bank. To meet that demand and keep pace with population growth, President Vicente Fox has set a goal of building 750,000 housing units a year by 2006.

Many Mexicans living in the United States earmark a share of the money they send across the border for home construction. But many have been discouraged by the pitfalls. Currency exchanges charge commissions that can add hundreds of dollars to the cost of sending money home. Then there are erratic suppliers, dishonest contractors, reluctant banks and unreliable family members.

"Maybe you buy bricks in the street. They might look good but don't hold up," said Alejandro Solorio, who heads Chicago's Construmex office. "Maybe your cousin has been taking some of your housing money to go to the canteen. This happens."

The Mexican government is working with Construmex and a handful of other private companies to encourage homeownership through the National Commission for the Promotion of Housing.

Since it began offering its services in early 2002, Construmex says, the company has handled more than $3 million in construction sales managed from its eight offices in the United States, six in California and the others in Chicago and Houston.

"When our clients make a payment, we guarantee delivery of their materials," Solorio said. "They organize the actual building."

Construmex removes uncertainty by guaranteeing all needed construction supplies will be available. The company charges a $1 fee for each payment but turns a profit on the sale of building materials that are supplied by its parent company, Cemex, Mexico's largest manufacturer of cement.

The company's most popular model, Solorio said, has two bedrooms, a kitchen and a living room with a little less than 1,400 square feet of living space. The supplies needed for the foundation, four walls and a roof over such a house cost $6,700. Labor and finishing - such as windows and doors - brings the cost of a new Construmex home to about $14,000, Solorio estimates.

But pay-as-you-go construction will not solve the housing shortage.

Private financing is needed to spur a development spree. Until recently, there was no way for a Mexican living in the United States to finance a home across the border, said Adrian Aguayo, an executive with Confi Casa, a Houston-based company working with the Mexican government to make such loans available.

Backed by a $380 million line of credit from the Mexican government, Confi Casa officials said, they started writing cross-border mortgages three years ago.

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